Is the Indian economy going to counterattack in 2022? Whether you believe it or not, the ranking of GDP in the world has undergone relatively important changes. In recent days, International Monetary Fund IMF has released the world's GDP data. The top 4 are still unchanged, namely the United States, China, Japan and Germany, but the fifth place has changed. We know that in the past, the United Kingdom was generally ranked fifth, but now it has changed.
As India, once a British colony, its economy has surpassed the UK in the last quarter of 2021 and further expanded its leading advantage in the first quarter of this year. Therefore, India has become the fifth largest economy in the world. India's economy is expected to grow by more than 7% this year. IMF also predicts that India's GDP may exceed 20% of the UK in five years. The third brother is really amazing this time. You should know that 10 years ago India's GDP rankings in the world were almost all outside the 10th place, but why did it suddenly become the fifth largest economy in the world today? Could it be that India's economy will take off in the past few years? A counterattack? what is going on?
I think there are two main reasons why the Indian economy has achieved today's results. The first reason is that the UK, which once ranked fifth, has experienced a severe economic decline, giving India an opportunity to take advantage of. We say that the UK has been in a bad situation since Brexit, and since the Russian-Ukrainian conflict, the UK has been sanctioning Russia in the footsteps of the United States and has ushered in the current energy crisis. After losing Russia's cheap natural gas , the UK's own energy and electricity prices soared, and it is now facing the worst inflation in 40 years. The inflation rate has almost reached 10%, and the economy is also facing the risk of recession.
plus the previous few months, the UK has experienced several months of leadership vacuum, which has further enlarged the UK's economic recession and the humanitarian crisis caused by soaring energy costs. In addition, Fed has opened the pace of interest rate hikes , and the British pound has also depreciated significantly. The entire European economy, including the UK, is not very good, which gives India the opportunity to catch up.
Let’s take a look at the second reason, that is, India itself is also making a fortune in silence and constantly developing, and I said that it is stepping on several boats at the same time, and finding the right opportunity to reap the benefits from the changing situation in the world. First of all, India does not offend Europe, Russia, nor the United States in the conflict between Russia and Ukraine. Instead, it only wants to buy cheap Russian oil, and uses rupee settlement, which can bypass Western sanctions. India has been buying frantically this year. Russia's cheap oil can sometimes reach a discount of 20% or even 30%. The amount of Russian oil imported by India has increased dozens of times this year.
India has imported so much oil. In addition to using it and reserve it himself, he also took out a large part of it and sold it to Europe at a high price, making a difference, because Europe cannot buy Russian oil and gas now, causing energy prices to soar. India just happened to be a second-hand dealer, raising the price of point and sold it to Europe. On the one hand, India has established good relations with Russia and bought discounted oil. On the other hand, it also helped Europe solve the problem of energy supply. Although the price is a bit expensive, it is already very good for Europe to use it.
Secondly, India’s current status in the hearts of the United States is also pretty good, because what is the United States keeps calling? Indo-Pacific, India, as an important part of the Indo-Pacific circle, naturally received deep sponsorship from the United States and received a lot of investment. Finally, in addition to making money from Europe and the United States and taking advantage of Russia's discounted oil, India has also undertaken a lot of manufacturing transfers from China, especially Apple .
Apple has been continuously moving some factories from China to India and Vietnam and other places in recent years, because India's cost is cheaper. I see that the Internet says that Iphone14 will start assemble and produce in Indian factories within two months of its launch. This is a situation that has never been seen before. In the past, new iPhone phones were generally produced in Foxconn, mainland China. Therefore, India only picked up Chinese food, and the remaining oil and water were also very good. So you see, this is really a matter of hiking on multiple boats, making money together through multiple channels, and finding the right opportunity to reap the benefits of the fisherman.
In this way, the Indian economy has slowly developed to the fifth largest economy in the world today, but the Indian government seems not satisfied with the status quo. They think it is not challenging enough to surpass the UK.
According to the confidence level of Indians, their National Bank once made a high-profile prediction that in 7 years, India's GDP will surpass that in the world's second largest economy, Japan. It also threatened that India may catch up with China in 25 years. No matter how they predicted it inaccurately, just judging from the GDP growth rate in the first half of this year, India has reached an astonishing 8.4%, making it the fastest growing country in the world. It seems that India has the capital to brag this time.
Judging from the current data, India's economy seems to be rising. On the other hand, India's population is also rising. If nothing unexpected happens, India's population should surpass my country next year and become the largest population country in the world. The overall average age of Indians is still much younger than us. India's population is generally 10 years younger than us, so India is ushering in a wave of big demographic dividends.
Modi Before, it often said that there is something wrong with a country with 800 million young people. However, it is worth noting that from the perspective of India's economic structure, the highlight of their growth lies mainly in the service industry. India's service industry increased by 25.7% year-on-year, contributing more than 2/3 to the overall economic growth. Therefore, it is still feasible for India to have more people and have more power. In fact, the service industry has always been the main driving force for India's economic growth. But in the long run, I think India is a little faster, but it will not last a lifetime, because its shortcomings are also obvious. So if a country wants to become a big country, it depends on manufacturing and high-tech technology. Obviously, India is quite lacking in both aspects.
First of all, the overall population quality of India is not very high. I think it has a lot to do with education and caste system . Most people are only engaged in low-end manufacturing and service industries. India is still a low-income country. There are still many slums you see. Moreover, India has too few foreign exchange reserves . According to the current situation, it has not been enough for a year. Moreover, the overall supply chain is not mature, lacks technical talents, and the tariffs are still high. This series of problems reminds India that their transformation to a major country is actually quite long.
India has been calling for its Indian manufacturing for many years, but India still cannot produce a decent industry that can hold on, which is quite meaningful. The rapid economic growth over the past 10 years is largely due to its reliance on the US dollar, which is actually overdrawing itself. If the United States starts the harvesting rhythm, then India will soon fall into the US dollar loan trap.
We say that India's business environment is also quite criticized. This year, India suddenly announced the seizure of more than 5,000 crore assets of Xiaomi Group in India, saying that it was conducting a so-called surprise tax inspection. In fact, not only , Xiaomi , but many international companies have also been cheated by India. International companies such as the British telecom giant called VoFonda, the American IBM, the French spirit producer Perlator and other international companies have all been asked for debts from India. This is often the case for Indian routines.
When you didn't go to India to set up a factory, India first tempted you with a huge open market, and then begged you to build a factory and invest. After you built the factory in India and brought the production chain over, India began to kill pigs and began to think of various ways to collect taxes, fines and tariffs, and vigorously subsidize local enterprises. If you really can't find a reason, you may just ask for money directly. It really fits the saying that India makes money, and India wants to take it home after spending a while. Big companies like Ford, GM, Harley, etc. have all evacuated India one after another.
It is understood that in the past seven or eight years, more than 2,000 multinational companies have suspended their business in India, so overall, the Indian economy is temporarily ranked fifth in the world, which is a bit of the background of the times, because of the special international environment, such as the Russian-Ukrainian conflict, Europe is in an energy crisis, my country's manufacturing industry goes south, the United States calls the Indo-Pacific, etc., plus in the past 10 years, India has taken advantage of the low-dollar loan financing path, and it has indeed had a highlight moment, but it has gradually fallen into the US dollar trap. At present, India has still very little foreign exchange reserves, so they learned the Russian ruble settlement order, and they have also developed a rupee settlement mechanism, but the effect is not good at present.
If we look at the time longer, I think India's economy will continue slowly. Although India's population is indeed large and young, if India's overall cultural quality cannot be improved with science and technology, its manufacturing industry will be difficult to become stronger. With the service industry alone, its room for growth is very limited, what do you think.
